Moral Hazard Can Be Avoided By

question 36

Multiple Choice

Moral hazard can be avoided by:

• A)employers monitoring employee effort.
• B)removing the asymmetric information.
• C)employers incentivizing employees to maintain consistent effort.
• D)All of these statements are true.

---

Definitions:

Accounts Payable

Liabilities to creditors that are short-term financial obligations arising from purchasing goods or services on credit.

Accrual Basis

An accounting method that records income and expenses when they are earned or incurred, regardless of when the cash is actually received or paid.

Internal Service Funds

Funds used by a government or organization to account for the financing of goods or services provided by one department to other parts of the organization, on a cost-reimbursement basis.

Special Revenue Funds

Governmental funds intended to be used for specific revenue sources that are legally restricted to expenditure for particular purposes.